Treasuries Spread Bets

Treasuries spread bets, i.e. trades on bonds and short-term interest rates (STIRs), can be used to take a view on where a country’s interest rate is headed next, or to measure the market’s confidence in a government’s ability to service its own debts and accoridng to Tim Hughes, MD, IG:

Significant themes like the future of the euro and managing the US deficit are going to linger for some time

Financial spread betting offers clients a number of benefits when trading Treasuries, including a transparent pricing structure and the ability to make profits free of tax*.

Also, because spread betting is a margin-traded product, only a percentage of the total exposure is required initially as a deposit.

Of course, it is a high risk form of trading. Please be careful.

Missing Out By Not Spread Betting on Bonds and Interest Rates?

If you’re worried that you’re missing out because you’re not spread betting on interest treasuries, don’t be too concerned.

A lot of firms offer 5-10 treasuries markets but they see very few trades on them (less than 0.5% of all spread bets).

That’s not a surprise when most spread bettors like volatile markets and neither bonds nor STIRs are that volatile on a day-to-day basis.

Also, these are longer-term markets and therefore not that suited to financial spread betting or CFD trading.

If you throw in the added complication that interest rate markets are essentially reversed, i.e. these markets are priced at “100% – the predicted interest rate” and that adds another level of confusion and another reason not to trade.

Looking for More Bonds and Rates

They also offer 2-year and 5-year Treasury Notes, as issued by the United States, as well as UK Short-term Gilts.

Actually on the IG platform you’ll also find, Euribor, Euroswiss, Sterling Deposit, German Schatz as well as Canadian and Japanese bonds.

Spread betting carries a high level of risk. You can lose more than your initial investment or stake. Spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.

Spread betting carries a high level of risk. You can lose more than your initial investment or stake. Spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.

SpreadBets.org.uk does not endorse the information and analysis available on this site. It is a personal view of the writer and purely for information purposes. Under no circumstances is the information hereon to be used or considered as, an offer to sell, or a solicitation of any offer to buy. The website content does not constitute investment advice and neither the individual writer(s) nor SpreadBets.org.uk accepts any responsibility for any use of the content.

* Spread betting is tax free in the UK. This tax free status is subject to change and can differ if you pay tax outside the UK.